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Is Affordable California Health Insurance Finally on the Horizon?
December 2007


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In an unexpected turn of events, Republican California Governor Arnold Schwarzenegger and the Democratic state Assembly Speaker Fabian Nez have reached a preliminary agreement on a $14 billion dollar plan to overhaul California health insurance, and the state's health care system as a whole.

According to the Kaiser Daily Health Policy Report, under this new plan nearly all state residents will be required to obtain health care coverage. So how will Schwarzenegger provide affordable medical coverage to Californians who are currently unable to afford insurance, but don't qualify for state subsidized plans?

Residents with incomes of up to 250% of the federal poverty level would be offered state subsidies for coverage, and residents with incomes of up to 400% of the poverty level would be allowed to fully deduct any health insurance premium costs that constitute more than 5.5% of their incomes. Even more, low-income residents would be exempt from this new coverage mandate if they were required to spend more than 5% of their income on basic California health insurance, and still do not qualify for public programs.

So who is going to pay the large bill for this more affordable medical insurance plan? Schwarzenegger has agreed to Nez's proposal that they partially finance this health care system overhaul by increasing California's tobacco tax. And the new health plan could be further supported by another 4% tax on hospital revenue, in an effort to obtain matching federal funds and raise reimbursements for services.

So,will there be more taxes for California residents to pay in order to support Schwarzenegger's high-stakes plan? As of now there hasn't been any discussion of taxes for California health insurance, however $14 billion dollars in funding is still needed for the overhaul, and many people fear that budget cuts to Medicaid will be a part of the plan.

Facts on:

Affordable Medical Insurance

Did you know...
There are more than 6.5 million uninsured Californians?
Other supporters argue that with a more affordable medical insurance plan available to California residents, overall costs will be saved.

Regardless, these revenue provisions will have to go before the voters on the November 2008 ballot, and the plan wouldn't take effect unless state residents approved the measures, suggesting that there's still much more to come in terms of the negotiations for California's medical coverage system.



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